"....There is a bigger story here as well. Banks play a central role in facilitating other economic activity, which makes them fundamentally different from non-banks.

Banks are not only for-profit businesses, they are essential social institutions. The economy falters when they do, as the global financial crisis reminded us. Trust in these institutions is a necessary and essential component of financial stability.

Trust is also central to Canadians’ retirement security. The banks not only help Canadians invest for their retirement, but bank stocks also make up a significant component of the investment portfolios of many Canadians. Canada’s banking system is highly concentrated: the “big six”, five of which have been implicated in the scandal so far, accounting for more than 90% of all bank assets. As a result, each of these six institutions on its own has a key role to play in advancing and protecting the public interest...."https://businesslawblogsite.com/2017/03 ... g-scandal/

This is why we feel a full Public enquiry is required. If our most trusted institutions, both financial and socially important and vital to our nation and our economy, are allowed to operate without regard to laws, rules or codes of conduct, if they have found the ability to rise above the laws of the land, then our very society is put at risk, for the financial benefit of banks, lawyers, regulators and a few other handmaidens.

I look back now and realize that I have appeared as an investment industry expert in one provincial legislature and three Parliamentary Committees since 2004.

Each time I do this I hope for positive change within the financial industry, and each time I go usually learn a great deal more than what I knew when I arrived to testify.

Sometimes this a learning process happens immediately, and sometimes it takes year of mentally processing each experience to connect the dots in a puzzle which cannot be viewed until it is solved.

Here are a few ‘takeaways’ from my experiences, that I still cannot quite process, I hope you do not mind me sharing them with you:

What if Regulatory Authorities will sell “do not go to jail cards”, or “exemptions to Securities Laws” thousands of times without a single notice to investors who may purchase those unprotected, un-governed investments? See example #1 below

What if Regulatory Authorities ignore laws designed to protect Canadians, where it comes into conflict with the interests of Financial and Investment firms in Canada? See example # 2 below. (120,000 Faked advisers, ignored)

What if the financial system laws in Canada could be ‘re-written’ so that jail terms intended to apply to ALL White Collar Criminals, would specifically exclude ‘public markets’ criminals such as Bankers and Investment Brokers? See example #3 below

What if the financial industry was powerful enough to change rule sand laws to effectively “neuter” or “neutralize” an investor protection agency which did it’s job too well? What if such an agency could be ‘barred’ or ‘forbidden’ from investigating systemic crimes which may involve millions of a bank’s clients? What if they were told that each crime could be looked at on a one by one basis, but to investigate “systemic” matters which may involve millions of the bank or investment dealer clients, was no longer allowed? See OBSI example #4 below.

What if an entire network of financial “stakeholders” came together to create a brand new “Client Relationship Model, of increased disclosure and transparency…and yet this brand new model concealed the license, registration, duty of care and agency duty (elements of the relationship) from disclosure to the public?

All of things would point to a system that was bent more towards the ‘predatory’ side of the game, rather than toward the ‘professional’ or ‘protective’ nature of a real service.

A few details and sources for each example are found below: If additional information is sought, a series of articles on the site UNPUBLISHED OTTAWA also addresses some of these systemic issues, articles can be found here http://unpublishedottawa.com/search/content/elford===============================================================================================================================

1. What if Regulatory Authorities will sell “do not go to jail cards”, or “exemptions to Securities Laws” thousands of times without a single notice to investors who may purchase those unprotected, un-governed investments?

RESULT: Ontario Securities Commission sells (allows for money) several thousand exemptions to the law, dozens of which were required to allow an illegal, non-sufficiently rated investment product to be sold to Canadians, allowing $32 Billion to be schemed out of Canadians, including $1 billion from the Public Service Pension Plan, the plan for retired Judges and RCMP officers among others.

THE TAKEAWAY: MIND BLOWING!! Securities Regulators will sell permissions slips of “do not go to jail” passes to financial industry players, and Canada can be harvested of amounts of approximately HALF of the financial harm from all total criminal acts in the land….in just ONE investment product out of thousands, using on exemption granted (out of thousands)

The link here, holds government sources and my writing on the topic of “Exemptive Relief” to the law, and has over 40 articles relevant to Exemptions. It is also found in this same forum, in the topic of “Exemptions to the law"

2. What if Regulators can simply ignore laws designed to protect Canadians, when it comes into conflict with the interests of Financial and Investment firms in Canada? See example # 2 below. (120,000 Faked advisers, ignored for decades until media steps in)

39th PARLIAMENT, 2nd SESSION, Standing Committee on Banking,"How Canadians Are Financially Abused”LARRY’s TESTIMONY: “ Further to the point about misleading sales practices, here is the complete list of employees of one prominent firm that sold this particular product. There are several hundred names, 24 pages, in fine print. Ninety-nine percent of the people on this list are registered and licensed as salespersons with the provincial securities commissions; 100% of them represent themselves to clients as financial advisers. “Advisers” is a legal registration category with the securities commissions, and it is illegal to misrepresent that title.”Competition Bureau looks the other way“They're duped by a misrepresentation that's illegal under Canada's Competition Act, a misrepresentation that meets the definition of fraud in Canada's Criminal Code.”“These clients and the public were helpless within the law and they were without hope of even having any access to the law”“Can anyone recall the cigarette and tobacco industry of the 1950s, many years ago, when lies, misinformation, and experts were bought and paid for by a billion-dollar industry to dupe consumers and legislators? I feel we are in a very similar position today with the financial services industry. We are being duped—every one of us, and not just the victims here today.”

RESULT:

THE TAKEAWAY: ===============================================================================================================================

3. What if the criminal code could be ‘altered’ so that jail terms intended to apply to ALL White Collar Criminals, would specifically exclude criminals such as Bankers and Investment Brokers? I witnessed this.

In the Canadian Parliament 2009, to a Standing Committee on Justice and Human Rights, regarding Minimum Sentences for White Collar Crime.

LARRY QUOTES “ I would like to challenge this dangerous conventional wisdom, and I'll go so far as to call it a form of collective insanity.

“ I was saying that I'm here to tell you how to commit the perfect crime,”

“ Financial abuse by the institutions we trust is costing Canadians more money each year than the cost of every other crime in the country combined.”

“Finally, we come to the helpful effects of Bill C-52. I see nowhere in this bill where it applies to public market fraudsters. In fact, my reading of it shows that subsection 380(2) of the Criminal Code, relating to public market fraudsters, has been removed or is not present in this bill. That would be a fantastic gift from the writers of this bill to yet again the financial markets of Canada; we can continue to hide our crimes inside our own private regulatory system with no outside oversight or interference. Thank you for your time.”

LIBERAL MP MARLENE JENNINGS spots the ‘out’ and asks a question

The Chair: You're very welcome, and thank you. We're now going to also ask Joanne Klineberg to speak. You may recall that Ms. Jennings raised an issue regarding subsection 380(2) of the Criminal Code. The same point was raised by Mr. Elford. Ms. Klineberg has been given a heads-up on that. Are you able to clarify as to the actual status of the bill before us, as it relates to stock market manipulation, insider trading, etc.?[Expand]Ms. Joanne Klineberg (Counsel, Criminal Law Policy Section, Department of Justice): As the bill is drafted, the mandatory minimum penalty applies only to convictions under subsection 380(1), which is just the general fraud offence.

RESULT: The bill C52- Minimum sentences for white collar crime was passed, with bells ringing and much fanfare…..but intentionally or otherwise, the portion of the criminal code known as section 380, Subsection 2, which would make these jail terms apply to bankers for public markets fraudsters, was deleted.

THE TAKEAWAY: MIND BLOWING!! the result is that jail terms are to be applied two white-collar criminals across the board with the sole exception being those bankers an investment dealers who deal in public markets. Bankers and brokers or the section of the law applicable to bankers and brokers and those who deal in public markets, we're literally granted a do not go to jail card, in Bill C 52.

RESULT: I get asked about regulators, and my answer touches on the banking ombudsman, and how they are not ALLOWED to touch anything that is systemic (affects every customer potentially…)

THE TAKEAWAY: Mind blowing!! realization that we are ignoring, and carefully anding around the fact that Canada’s Official Banking Ombudsman and the one with the best reputation for catching and calling banks on their abusive practices, was FORBIDDEN to look at SYSTEMIC MATTERS, meaning they were allowed to catch a single banker doing her to a single customer, but NOT ALLOWED to pursue any matter which may involve more, or all bankers in a firm and/or doing harm to many or ALL clients at the bank….DO NOT TOUCH!!!

CBC investigative work uncovers the following issue related to the above ‘rigging’ of Canadian Financial systems:

."..there have been 581 individual contacts between top government officials and representatives of the banks or the Canadian Bankers Association (CBA). On average, that works out to eight contacts every week between the banking industry and federal government officials.”...and last week they let three -ex employees speak in Parliamentary committee. Seems fair and balanced…http://www.cbc.ca/news/politics/banks-f ... -1.4155703

I write to you out of fear that our systems of justice are being blemished in Canada with a reputation for being soft (or intentionally two-tiered) on systemic financial crime.

What will become of our country as we:

“Exempt” banks and investment dealers from thousands of our laws, without a single warning to the public of their newly acquired ability to be free from those laws. Let our most well-organized financial entities hire private “rental-cops” to oversee and to police their activities, which allows them to ignore laws at will.Remove ‘erase’ or ‘delete’ laws which call for jail terms for our biggest financial criminals (Hiding this fact in plain sight, within a bill which suggests just the opposite is taking place to protect the public.) (4) Remove Canada’s best investigators of banking and investment abuses, and FORBID them to ever again investigate issues of a systemic nature. (issues which may affect millions of clients)

I enclose specific examples of (3) and (4) above, where systems of financial regulation have been captured and altered to the detriment of our society. I also have examples of the other two which I will gladly share if requested. I beg your consideration of this matter in the interests of social justice.

Certain of our systems or rules, regulations or laws, appear to be intentionally designed so that one class of citizens can place themselves ‘above’ or ‘outside’ of the law, while the rest of Canadians must operate ‘beneath’ or ‘within’.

Throughout history this has occurred much to the detriment of social justice, and I am saddened to witness it occurring repeatedly here in Canada.

To bring about financial and social injustice, all that is required are systems of regulation, policing, justice etc, that enable financial acts which are against the public interest, to receive preferential, if not ‘zero’ consequences for their harms to society.

Enclosed are two examples out of a dozen others that I will spare you at this time.

In 2009, I testified to a Parliamentary Committee on Justice and Human Rights. This Committee was formed to look into tighter criminal sanctions for financial industry criminals after the sub-prime mortgage collapse of 2008. This collapse (or systemic robbery) removed on billion dollars, from the PPSP, (the pension plan for Judges and RCMP officers etc), and in total $32 billion overall from Canadians with these financial instruments. The result of the Committee process was the creation of Bill C- 52, (Minimum sentences for white-collar crime).

The only documented result that occurred from this bill, in my eyes, was that in the writing of Bill C-52 the criminal code section 380, and more specifically subsection 2, which applied to bankers, investment persons, or those who dealt in the “public markets” instruments, was simply eliminated. Eliminated as if it does not even exist in the Criminal Code of Canada, but yet it does. It just does not exist in this Bill C-52.

It was as if bankers in Canada were granted a free “do not go to jail” card in the most clever way imaginable. By simply erasing, deleting or forgetting to include subsection 2, in this Bill. This caused the intended jail provisions for financial fraud, to specifically not apply to public markets fraudsters, or to those who caused and profited from the financial collapse of 2008.

I witnessed this in a room in the East Block where the hearing was held, while bells were ringing and hearings were interrupted to prorogue Parliament during my speaking time. I could not believe what I was seeing and to this day I marvel at how easy it was to rig a Justice Bill, whilst pretending to improve justice. The rigging of the system was hidden…in plain sight.

Fast forward to June 7, 2017. I was once again invited to speak to the Parliamentary committee, this time a finance committee, established after CBC news investigators revealed that Canadian bank employees, were being abused by the banks, and being bullied, intimidated or forced to do financial harm to bank customers.

Over 3000 bank employees contacted CBC Go Public, and told of how they were being abused and bullied in the workplace, to push the employees to abuse Canadians financially, so banks could earn more money.

I was asked very good questions by almost every member of this FINA Committee, and it was in the answering of one of those questions that I found myself becoming quite emotional, almost upset.

I cannot remember the question I was asked, but by way of answering I explained that the majority of financial regulators in Canada are established and paid for by the investment industry itself, the very people that the regulators are supposed to police.

This has always struck me as incredibly unskillful design, until I came to the understanding that it is quite likely the intentional design. I have come to the realization that regulators are not always there to insulate the public from financial abusers, but may exist more often to protect and insulate our highest level financial abusers from Justice and accountability.

Approximately 100 various industry paid bodies helps to keep the police and crown prosecutors from looking at financial matters. It seems that they never look at systemic financial matters, leaving the ‘inner workings’ of the system to others. This no matter how many billions in harm may be done to Canada.

In one example the official Canadian Banking Ombudsman, which goes by the acronym OBSI, was in the last few years prohibited, limited, or forbidden from investigating, studying, preventing or even reporting upon matters which involve systemic financial crime or abuse, by those who were under its mandate.

I knew this was the case all along, but it was not until June 7, 2017, that it hit me: Canada's official banking ombudsman, charged with investigation and protection of Canadian banking and financial customers, is now prevented by decree, rule, or perhaps by limited mandate** from its ability to investigate financial crimes of a systemic nature. ** (see OBSI altered terms of reference with “systemic” struck out seven times https://www.obsi.ca/download/fm/149)

They are still allowed to act as banking ombudsman on a case-by-case basis, if my understanding is correct, but if the matter is systemic and able to affect millions of Canadians, they are no longer allowed to proceed.

Thus one of the only remaining, effective, bodies in the country has been told, and if you will forgive my layperson understanding, that it is no longer allowable for our official banking ombudsman to investigate systemic financial illegalities. They have been neutered.

Thus I write to you Madam Justice out my complete lack of understanding of how to inform, protect and make Canadians aware of, how their economic freedoms are being manipulated, in hidden behind the scenes manners. This is approaching financial injustice, to a level sufficient to cause social injustice in our country. Can we afford to sell out any one of these trusted systems? What will become of our society if we stand by and watch this occur?

My speaking to Finance Committee on the question of OBSI can be found in this1 minute and 20 second video at 16:33:00 to 16:34:20 on Wednesday June 7, 2017: http://parlvu.parl.gc.ca/XRender/en/Pow ... %2010_11_6)%20AppleWebKit/603.2.5%20(KHTML,%20like%20Gecko)%20Version/10.1.1%20Safari/603.2.5

The emotion I felt in Committee is for my grandchildren, perhaps yours, and those of every other Canadian.

It is for this reason, that I will continue to ask Parliamentary committees, to please prevent the rampant criminality of Canadian banks and financial players, and speak out against the immunity that these players have when harming society.

Millions of Canadians have been financially, morally and mentally injured by the injustices that are allowed to benefit only a few (3?) sectors of the economy.

I thank you for the courageous stands that you have taken in the past, on behalf of Canadians, even when your comments were not entirely flattering to your own legal profession. I applaud that moral courage in you.

I thank you for perhaps pondering and considering some of this note. I expect no immediate answer and will not bother you again. I will, however, be at your service if I am requested.

** (see OBSI altered terms of reference (draft) with “systemic” struck out seven times https://www.obsi.ca/download/fm/149)===========In October 2008: Following an extensive consultation that began last year, OBSI’s board of directors has approved a revised Terms of Reference to guide our dispute resolution service. The target implementation date of the revised Terms is April 1, 2009Two of the more notable changes are in systemic issues and new complaint-handling procedures.On systemic issues, the Terms now have a provision under which OBSI will be following up on potential systemic issues that arise out of individual complaint files by contacting the firm and asking it to undertake an investigation. https://www.obsi.ca/en/download/file/589/503430102008enp-1426707907-504e2.pdf

========4 days after OBSI's mandate was expanded to include systemic issues RBC pulls out and opts to go solo. Unilaterally firing the only Canadian Bank Ombudsman which they are obliged to utilize as per the terms of OBSI and Canadian Banking System rules. RBC hires its own independent arbitration services ADR Chambers, comprised of privately hired arbitrators, many of whom are retired judges looking to augment their retirement earnings.

The new terms allow OBSI to identify systemic shortcomings and recommend compensation for all affected customers – not just for the person who complained. Too broad to some banks who wish to restrain the Ombudsman to investigating EACH customer victimization or violation at a time. This would mean that if millions of bank clients were harmed, the Ombudsman would have to investigate one million times, rather than do one investigation that covers identical harm done to one million victims.

RBC's move to another dispute resolution service, coming so soon after a major expansion of the independent ombudsman's powers, may indicate its displeasure.

To me, it shows that Canada's largest bank prefers to be held accountable only for problems that affect one customer at a time.

Unlike banks, investment dealers are required to participate in OBSI but in recent years, a number of the bank-owned brokerages have been aggressively agitating to opt out because they want to use other complaint resolution providers, such as ADR Chambers.

“OBSI has already been irreparably damaged by the public disagreement,” investor protection groups wrote in a letter to industry regulators. “Because of all the negative publicity and hostility, OBSI will never the same again.” http://business.financialpost.com/news/ ... rs-on-obsi Theresa Tedesco | May 30, 2011

In 2011, TD Waterhouse, RBC Capital Markets Ltd., Investors Group Securities Inc., Macquarrie Group and Manulife Financial Corp. filed an application with IIROC and the MFDA to be exempt from using OBSI to resolve disputes with disgruntled customers. That request was rejected by the regulators and since then there have been a series of meetings and discussions to try to resolve the matter.

In 2012 an unnamed bank refused to correct a systemic issue that was pointed out by OBSI to them and then in 2013 ‘presto’, OBSI can no longer investigate systemic issues!

Feb 24, 2012If consumers have unresolved complaints about a bank or investment firm, they can appeal to the Ombudsman for Banking Services and Investments.

OBSI, a non-profit agency supported by member funding, has been around for 16 years. Yet it’s under siege by member firms that criticize the way it handles complaints.

When I testified to FINA in 2017 I realized that the decree: ‘you shall not touch systemic crime’, was put into place, intentionally to prevent or bar investigation of Canada's largest crimes, typically those between 100 million and $100 billion. (Larry Elford)

MP Jennifer O’Connell asks Larry Elford about trust and who to trust in financial systems today at 16:49:00 and Larry Elford answers about the 4000 truly registered and legally licensed financial advisers in Canada (spelled ADVISER and not advisor) verses the 120,000 commission sales agents who are being forced to deceive the public, while being forced to push products onto the public....in a sales capacity and not always or often in an advice capacity....plays to 16:52:38 3 minutes approx

A committee of federal MPs was hearing testimony from ex-bank workers as it examines accusations of questionable — and even illegal — sales practices by some of the country’s largest financial institutions.

The committee launched the hearings following a number of CBC reports citing unnamed employees at some big banks who allege they were pressed to sell unnecessary products and services in order to increase revenues and meet lofty sales targets.

The report named all five of Canada’s major banks: RBC, BMO, TD, CIBC and Scotiabank.

“It is absolutely profit before anyone else — it certainly has nothing to do with servicing the clients, as far as I could tell,” witness Sally Watson, who worked for Scotiabank for 33 years, said when asked about the industry’s culture.

“I think what’s shocking is how long this has been going on without anybody ever making a fuss about it — and I think it’s time a fuss was made.”

Some of Watson’s remarks focused on her time working for the bank a couple of decades ago. She also noted that her allegations on the more-recent culture at the bank came from second-hand accounts.

Watson also credited the scandal at Wells Fargo in the United States for encouraging Canadian employees to come forward with their own concerns about the industry. Wells Fargo was fined US$185 million last year after employees opened more than 2 million fraudulent accounts in their effort to hit imposing sales targets.

After its initial report, CBC said it received nearly 1,000 emails from employees of Canada’s five largest banks, alleging they felt pressure to “upsell, trick and even lie to customers” to hit targets that are constantly monitored.

All five banks have denied the claims, defending their practices and insisting that they put the needs of their clients first, regularly seek employee and customer feedback and address any inappropriate behaviour.

The committee is scheduled to hear from bank officials next week.

Scotiabank’s CEO told shareholders in April the reports were “largely unsubstantiated.”

Brian Porter said Scotiabank (TSX:BNS) received eight complaints about sales practices last year — out of 400 million interactions between his bank’s clients and its employees.

“We take each of those eight very seriously,” Porter said.

“We investigate them. We’re proud of the bank. We’re proud of our employees. We’ve got very sound sales practices. We monitor and adjust them where we think it’s necessary.”

As an employee, Watson said she was informed and received training many times in relation to strict codes of conduct at the bank for client confidentiality, money-laundering prevention and workplace discrimination.

But she insisted she didn’t recall ever hearing anything about a code of conduct on how products should be sold.

Employees have felt squeezed for decades to hit sales performance targets, and are told that failing to do so could eventually cost them their jobs, she alleged.

“People literally dread getting up in the morning because of the horrible things they know they’re going to have to do when they get to work,” she said.

“They’re going to have to sell somebody a mortgage they can’t afford, they’re going to have let somebody buy a more-expensive car than they can afford.”

The committee also heard from former bank employee Larry Elford, who alleged that banking clients who seek the advice of a financial professional are sometimes directed to a salesperson instead.

“And the banks are pushing salespeople at their customers as hard as they can push.”

Elford, who has become an advocate for investors, said he started working in the industry in 1984 and has held positions with some of the country’s largest financial institutions.

He said it only takes a two per cent reduction in the return of one’s investment portfolio to cut future savings by half over the long term.

Elford also called into question the work of regulators that are mandated to protect Canadians from financial harm at the hands of the industry.

Earlier this week, the committee heard from Financial Consumer Agency of Canada commissioner Lucie Tedesco, who said a review of bank business practices is underway, with initial findings due by the end of the year.

“If we discover that laws were broken, we will conduct investigations then we will take the necessary measures that include penalties against financial institutions,” Tedesco said in French during Monday’s hearing.

Darren Hannah of the Canadian Bankers Association has already told the committee that a key element of customer satisfaction is how banks respond to complaints, and that the association’s members co-operate with regulators.

On Wednesday, the committee also heard from Stan Buell, the president of the consumer advocacy group called the Small Investor Protection Association.

Buell said he lost his life savings three decades ago, allegedly as a result of fraud and wrongdoing by a major financial institution.

“Like most Canadians, I trusted them to look after my best interests,” said Buell, who called on Ottawa to establish a national consumer protection authority to not only work with all regulators, but to have the power to order investigations.

Larry Elford, a former certified investment manager with RBC, was among the witnesses appearing before the Commons finance committee looking into sales practices as Canada's big banks.Larry Elford, a former certified investment manager with RBC, was among the witnesses appearing before the Commons finance committee looking into sales practices as Canada's big banks. (Dave Rae/CBC )Canada needs a federal investment protection agency, separate from the banking and investment industry, to protect Canadian consumers from some of the practices of Canada's big banks, says a former longtime bank employee.

Larry Elford, a former certified investment manager with RBC, said some parts of the banks' activities fall under federal jurisdiction while others fall under provincial jurisdiction.

"The silos that separate the mutual fund salesman from the bank employee, from the investment salesman, from the provincial regulation, from the federal regulation are like a shell game," Elford said in a news conference on Parliament Hill ahead of his testimony before MPs on the Commons finance committee, which is holding hearings into the sales practices of Canada's big banks.

Deceptive titles said to be putting investments at riskHe cited the example of an elderly woman raising a middle-aged blind son, distressed after her financial institution talked her into taking out loans she couldn't afford to buy mutual funds that were riskier than they should have been.

Elford said the business cards he saw from the financial institution she dealt with, showed different titles for the same person and the person authorizing the loan was the same person selling her the mutual funds.

"Quite frankly, there's no one who can keep track of this, and there is certainly no one at the FCAC (Financial Consumer Agency of Canada) who is keeping track of this and trying to make sense of it."

Elford said many financial institutions lead clients to believe that they are dealing with a licensed financial "advisor "when they are actually dealing with an "adviser" who isn't licensed and whose job is simply to sell products regardless of whether they are in the client's best interest. (**NOTE: This article has accidentally reversed the spelling, the registration found to in The Securities Act is “Adviser”, while advisor is found nowhere in the law and is said by Securities Commissions in Canada and the CSA (Canadian Securities Administrators) to be a non lawful, non regulated “title”)

"It's worth billions of dollars every year to exploit the difference between an o and an e on a person's business title."

"There has to be a separation between persons who sell products for a bank or any institution and persons who give advice which is considered and required to be in the fiduciary best interest of the client."

Elford said the finance committee hearings are lifting the lid on an important issue for Canadians.

"I think we're opening a Pandora's box here, and the Pandora's box has to be opened and opened," he said, adding some MPs appear to want to close the lid on that box.

Elford will be testifying before MPs later today when the House of Commons finance committee resumes its hearings into the practices of Canada's big banks.

Also scheduled to appear are former bank employee Sally Watson and Stan Buell, president of the Small Investor Protection Association.

The hearings come in the wake of a series of stories by CBC's Go Public in which bank employees described questionable practices by some of Canada's biggest banks. Allegations include pressure being put on employees to meet ever increasing sales targets, signing clients up for services without informing them and forging signatures and initials.

On Monday, MPs heard from the Financial Consumer Agency of Canada, which says it has launched an investigation into the banks' practices, and the Canadian Bankers Association. Representatives of Canada's big banks are to appear Monday.

If, after the hearings, the committee finds that there are problems that can be addressed by government action or tighter regulations, the committee can recommend to the government that it act.

What an insightful Question and immediate research done RIGHT NOW!, by MP Jennifer O’Connell. (she was literally researching the issues that came up in Finance Committee, while the committee was in progress) Amazed, I am...

During my testimony today the subject came up about conflicts and pressures upon bank and financial (investment) salespersons, and I mentioned that TD had recently raised the commission/fee-demand bar....or alternately handed their sales brokers a forced pay cut.

Changes to the payout grid at TD Wealth PIA add to the trend in which firms are looking to reduce their ranks of lower producers

By Clare O'Hara, Geoff Kirbyson | Mid-November 2013

At first glance, it appears that lower producers are being hit by the changes to the payout grid at TD Wealth Private Investment Advice (PIA). But, upon closer inspection, financial advisors across the board are at risk of seeing compensation dollars disappear.

According to a confidential document from TD Wealth PIA entitled Drive to 100, the threshold for earning income on the low end will rise while the payouts for low producers will drop in the bank's 2014 fiscal year, which began Nov. 1. For example, any advisor bringing in more than $375,000 but less $400,000 in gross production now will earn a flat 20% commission; last year's payout grid offered a 30%-44% payout for the same level of productivity.

That change could translate into some brokers seeing their annual income drop to roughly $70,000 from about $150,000.

"All of a sudden, the bus driver is making more than you and you're taking a lot more risk," says Charlie Spiring, chairman of the Investment Industry Association of Canada and senior vice president of Montreal-based National Bank Financial Ltd. (NBF). "You don't have conventional hours and you have the risk of litigation. It's not worth being a broker [at that kind of salary].”

But it's not just the predicament of "lower" producers at TD Wealth PIA that's raising eyebrows. The firm also has introduced new policies relating to the discounting of fees and advisors' stock-option bonuses known as restricted stock units (RSUs). These changes could affect advisors' take-home bonus regardless of their gross production level, as 40% of the bonus amount is based on hitting new targets. (The old RSU award was 100% based on production.)

[url]To qualify for the first 20% of the bonus amount, an advisor now will have to hit a minimum of 16 closed client referrals a year.[/url] Previously, advisors were required to complete two referrals a month, regardless of whether they were closed.

A further 20% of the qualification requirement is now based on the advisor reducing the number of non-profitable households in his/her book. This would include households generating less than $1,000 in annual gross revenue. Advisors' books now will have to hold 70% "profitable" households, by either increasing the activity of the lagging accounts or referring the stagnant accounts to another corporate partner firm, such as TD Canada Trust or a wealth partner.

Many TD Wealth PIA advisors have stock options that are deferred for at least three years — meaning their financial ties to the bank are stronger than some may think. Says Spiring: "Unless they have a competitor willing to offset the loss, [these advisors] aren't going to be walking out the door."TD Wealth PIA is eliminating its registered-plan fee payout for 2014, which will cut $15-$35 per account for brokers. The firm says it has been successful with its RRSP penetration but there have been some "unintended outcomes" as a result. For example, 60% of the firm's 18,000 single-account households are RRSPs and there is a "heavy concentration" of small and stagnant ones.

"You can no longer look at our grid and think that is what you will get paid," says a TD Wealth PIA advisor in Ontario. "You can't compare us to the rest of the banks because now we have so many moving parts that are all behind the scenes.”

Adds a TD Wealth PIA advisor in Western Canada: "It's a bit sneaky of the bank because, for me, it is not represented as a reduction in my grid. But my compensation will certainly change because some of these targets are unattainable.”

Also on the table is a new fee-based household discount policy that came into effect Nov. 1. Previously, an advisor could discount a client fee without any repercussions. Now, for all new fee-based accounts, advisors who discount commissions below the firm's recommended minimum will see their payout drop by 5%-15%. The confidential document says that the change is to encourage advisors to price their fees based on their value proposition and reduce discounting within their practices.

TD Wealth PIA has also boosted the minimum amount for advisors to discount a client commission for equities trades to $400 from $300 — also in hopes of reducing widespread equities discounting that's happening at the firm.

"What they're doing is punishing the advisor for doing [a] client a favour," says a TD Wealth PIA advisor in Ontario. "At some point, if you have to charge the full price to clients, you are going to end up having a conversation with them about the discount brokerage, where the bank will make $9.99 on the trade. It doesn't make sense.”

Dave Kelly, TD Wealth PIA's president and national sales manager, declined to comment on the compensation changes.

Ongoing uncertainty in the investment community is persuading many clients to stay on the sidelines, Spiring says, and the resulting decline in revenue for brokerages conflicts with the need for higher profits.

"Most of the firms aren't making their regular margins on wealth, and one of the ways to achieve that is to lower broker payouts," Spiring says. "Is it fair if you're a smaller broker? Of course not. But shareholders demand firms achieve regular margins. [And cutting payouts to the lower-end brokers] has become the easiest solution.

"Top-end brokers have a lot of loud voices and are desired all over the Street," he adds. "Lower-end and medium-producing brokers are more vulnerable.”

Spiring has been advocating for banks to rethink their options for widening their margins. At NBF, he has advised his team to consider dropping the level of gross production to $300,000 and start recruiting advi-sors who fall in the mid-tier category and who bring in "good-quality business.”

Spiring is worried that there will be fewer brokers at small and medium-sized firms in the future — and that doesn't bode well in an industry in which the average broker's age is already high: "One day, we're going to need someone to take [the books of retiring brokers] over. I'd like to have a well-trained, medium-sized broker take it over rather than a rookie who [needs] time to learn.”

TD Wealth PIA is not alone in addressing lower-end producers. Last year, Toronto-based Canaccord Genuity Group Inc. eliminated 35 advisory teams that it labelled as "underperformers" from its total of 180 such teams. And Toronto-based Raymond James Ltd. cut its grid for advisors making less than $400,000. Still, Raymond James added a number of mid-tier levels for in-house advisors making $175,000-$400,000 to encourage an increase in production. The lowest tier (for $175,000 gross production) dropped to a payout of 15% from 20%.

"I really commend Raymond James on this model," Spiring says, "because I think [it has] done a good job at starting to address the problem."Three years ago, Toronto-based ScotiaMcLeod Inc. followed a similar strategy, introducing a "developmental" grid for junior advisors to hit specific targets. The firm also changed its bonus compensation structure to move the focus from bank referrals and toward new external asset growth, says Hamish Angus, head of ScotiaMcLeod.Both ScotiaMcLeod's and NBF's grids have minimum thresholds at the lower end of the scale to escape the lowest commissions — NBF's threshold is $350,000; ScotiaMcLeod's, $350,000-$375,000. In contrast, Toronto-based RBC Dominion Securities Inc.'s threshold is at the top end at $500,000.

TD Wealth PIA's Drive to 100 report lists several key drivers for the investment dealer's future, including evolving to be a "premium price" firm, encouraging productive and profitable behaviour among advi-sors, and attaining industry average pretax profit margin by the end of 2015 and industry-leading pretax profit margin two years later. Says the report: "We want your practices, on average over time, to grow faster and be more productive and more profitable than our competition.”

Dan Richards, founder and CEO of Toronto-based Clientinsights, believes increased regulatory oversight for financial advisors is one of the primary causes behind the brokerages' desire to reduce expenses. "These are fixed costs, regardless of book size," he says. "If you're an advisor at a bank-owned firm and you're producing at a threshold that the bank cuts the payouts on, they aren't that interested in having you around.”

The commission cuts leave many affected brokers with a trio of options: accept the significant (about 50%) pay cut; move to a smaller firm with a higher payout grid; or become an associate on another advisor's team at your existing firm. (Richards doesn't believe the brokerages would want to move lower-producing advisors into bank branches.)

"You take your book," Richards continues, "meld it onto the book of a bigger advisor and, if the payout is twice as high on that bigger producer, you've doubled the total payout. All firms want advi-sors to focus on bigger clients, and one way to do that is [by] having bigger teams.”

Unfortunately for many advi-sors at bank-owned dealers, the option of teaming up to hit targets is not allowed."It's a missed opportunity, in my mind," says Spiring, who had several mid-tier producers join forces when he was CEO of Winnipeg-based Wellington West Holdings Inc. "There are ways to make this strategy work. And, at Wellington West, it certainly helped us get the business." [NBF acquired Wellington West in 2011.]Instead, the new grids also could lead to bad trading decisions, says one bank-owned brokerage executive who asked not to be named. Advisors who may be close to hitting the next pay scale, the executive says, could start to display behaviour that's not in the best interest of clients or the industry in order to reach that target. IE

Darren Hannah, vice-president of the Canadian Bankers Association, said Canadians are well-served by their banks and it is rare for a complaint between a customer and a bank to not be resolved by the institution.

Committee member Raj Grewal, Liberal MP for Brampton East, said that some banks are circumventing regulations by playing on the difference between an "adviser" and "advisor." The former falls under securities regulations, while the latter does not.

Hannah, however, dismissed the suggestion, saying there was a lot of misunderstanding around the issue.

"If you're in a regulated institution doing a regulated activity, the regulator is going to regulate you, and one vowel isn't going to change that."

This contradicts the various Securities Acts in 13 Canadian Provinces, the laws against misrepresentation found in those acts (specifically in BC section 34, in Alberta Section 75 and In Ontario Section 44) which say words to this effect:

Ontario Securities Act:

section 44 of the Ontario securities Act, ( misrepresentation is mentioned 118 times in the Act) where it says the following:

Representation of registration44 (1) No person or company shall represent that he, she or it is registered under this Act unless the representation is true and, when making the representation, the person or company specifies his, her or its category of registration. 2009, c. 18, Sched. 26, s. 9.

Representation prohibited(2) No person or company shall make a statement about any matter that a reasonable investor would consider relevant in deciding whether to enter into or maintain a trading or advising relationship with the person or company if the statement is untrue or omits information necessary to prevent the statement from being false or misleading in the circumstances in which it is made. 2009, c. 18, Sched. 26, s. 9.

(the representation of commission salespersons without a fiduciary duty (a “do no harm” type of professional standard) as if they somehow did have this license and registration is as illegal as the day is long...)

Essentially, letting 120,000 commission conflicted, bank (and other) salespersons prey upon investors, by pretending to be licensed and registered in a professional category is akin to myself calling myself Dr. Elford, since I did once take a Red Cross first aid course.

Uninformed, institutional answers like the one to the committee, are untrue, unfair, unskilled, and unprofessional ...for Canadians, and if they have some value, it is only in showing how banks make up answers to suit themselves and not necessarily to suit the facts.

My own 20 years in banks, and my testimony (located in this same topic) understands that such ‘fabrications’ can and will be made by banks or other financial institutions whom are mostly about to make up the rules as they go along, and have no non-biased oversight to be accountable to.

The Canadian Bankers Association represents the specific interests of its banking members and not the people of Canada.

(Each of the following examples of violating Canadians investment vulnerabilities is in my view an example of how easy it is to violate any and all principles, rules, codes and laws regarding a best interest, a fiduciary interest, a best efforts, or any other standard that might be imagined. It highlights that financial services (sales) works upon standards that are self unprofessional, unskilled, unfair to vulnerable Canadians, and simply unkind.)

1 Mutual fund sales using the highest compensation choice to reward commission salespersons. (71% to 91% of sales in past)

2 Commission salespersons typically conceal their registration and pretend to be licensed as “advisors”. (120,000 non-registered “advisors” in Canada)

3 Churning client accounts in order to change products for commission and fee reasons rather than advice reasons. (turnover means commissions...$$)

4 Double dipping, where clients pay a commission and then move the customer in a ‘fee based’ account to pay a second time. (Vice President’s sales trick)

5 Charging unsuspecting clients who are duped or deceived by #2 above, fees closer to the 3% range, (5% for some) than the 1% fees typically charged by fiduciary professional advisers and registered money managers. (Core goal of every sales meeting I sat in on, over a two decade time frame...)

6 Secret exemptions to the law, granted by industry-paid regulators, mean that investors often are purchasing what is an illegal or defective investment product, and the public is sold these products without notice or warning. (almost 14,000 passes to exempt the holder from law...see the forum topic on EXEMPTIONS in this same site by clicking where it says CLICK HERE TO VIEW FORUMS, above)

7 Selling investors the “house-brand” investment product, which earns between 12 and 26 times more money for the investment firm, than does an equivalent independent investment product, according to OSC Fair Dealing Model Studies. (92% of industry sales in 2007, MFDA figures) (see the forum topic on TRICKS in this same site by clicking where it says CLICK HERE TO VIEW FORUMS, above)

8 Selling the highest fee fund, or the fund with the highest commission reward 71% to 91% of the time due to the hidden sales conflict of #2 above.

9 More recently, (2000-2017) the strongest industry incentives have been toward putting investment clients (those who are well deceived by #2 above) into fee based accounts, sometimes called ‘advisor’ accounts. This cause the investor to begin a lifetime process whereby the will be charged usually 2% on “every dollar, held in every client account, every day of the year”, to quote an industry presentation on this form of harvesting clients. They pay this ‘advisor’ fee to a non licensed “advisor” (#2 above) and this fee does not cover the cost of the investments chosen, this ‘advisor fee’ is merely payment for the privilege of dealing with a pre-eminent investment dealer, which is abuse of market dominance AND deception combined together. (RBC had $35 billion under this in 2001...how much today?)

10 The investment selections, mentioned in #9 above, can then be as complicated, convoluted (due to the salesperson not having more than a “suitability” obligation) and as expensive as the client relationship will bear. (without a “do no harm” to client, standard of care, the standards allow “harvest” as much as you can)

11 The salesperson then becomes not a money manager, but a ‘relationship’ manager, doing everything possible to endear themselves into the hearts and the trust of the client and his or her family. The harvest of fees is fully dependant upon the level of trust and endearment that can be obtained with this license deception as the foundational lie….(it is fraud when the person promising to ‘help’ you has a) a hidden behind their back license that says otherwise, and b) lets you assume the false, rather than informing you of the true license, true agency duty obligation...kind of like letting Bill Cosby take you daughter to his home for help with her ‘education’...where true motives are hidden, not disclosed....hmmm, this is a unethical, unprofessional and unskilled standard of care, as low as it gets)

12 Dubious products which are the financial quality equivalent of “Lucky Dollar Giant” shopping, whereby things of the lowest possible standard are sold to investors, not because they are good advice, but rather because they are ‘good income’, or as the top selling ABC broker in Medicine Hat Alberta said to me when I asked him why he would even touch junk like MURBS (Multiple Unit Residential Buildings) and the like, his three word reply to me was “ten percent commission”.

‘Our financial adviser is such a nice man. Every year he takes us out for a wonderful dinner. I wish we could pay him in some way.”

This is an exact quote from a friend’s mother. It’s a classic example of a Canadian investor not knowing what he or she is paying. – Steadyhand’s Tom Bradley.

(each of the items of the list above, have exact product names and descriptions. Each of those products also has costs, and calculated harm that is done to investors. A research study is underway, to fully develop both this list, and the resulting financial cost to Canada. So far it appears to be costs which are greater than the cost of all measured stats on cost of criminal acts in Canada, which is used for a dollar value size comparison...to give readers a benchmark to compare how much harm may be being done to Canadians, from a predominantly ‘self’ regulating financial industry.

It allows taxpayers to question whether or not Canada can continue to trust the banks and investment dealers to police themselves,...on the honour system. A more fulsome list of tricks of the trade is found elsewhere in this same forum, please skim though the list of topics.========================== Proposed Solutions which should be considered if the reputation of Canada, and of its financial safety is to be restored:

1. A Fiduciary Standard is required if retail investors are to trust the “advice” they receive. Big Banks say trust us, advisors say trust us, regulators say trust us. These should not just be misleading advertisements or nice sounding meaningless words.

2. It is essential that Governments act to revise Statutes to ensure that all firms and individuals offering investment advice are held to a fiduciary standard regardless of their titles.

3. Those tasked with over-viewing industry conduct must be impartial, willing and capable of effectively punishing those who persist in unfairly harvesting Canadians savings. They must levy appropriate financial fines and incarceration when warranted.

4. Those tasked with over-viewing industry conduct must be NOT be paid, selected or appointed by industry stakeholders. The decks of regulation are now being improperly stacked in this manner, giving Canada a “wild west” reputation globally.

5. Victims must be paid restitution without having to turn to costly civil litigation.

6. Establish a statutory, independent of industry, Ombudsman for all banking clients with binding decisions. Immediately eliminate any third party for profit ombudsman ADR Chambers by eliminating all internal bank ombudsman.

7. Canada is in dire need of an ongoing informed, independent and thorough assessment of financial regulation. The consumer provisions need updating: they assume a certain level of conduct on behalf of financial institutions that just does not occur.

8. Establish an Independent Consumer Protection Agency would greatly improve the governance of financial regulation and would help compel regulators to act in the public interest by giving a viable voice to public concerns.

9. Immediately announce and launch a public commission of inquiry. Speak with the people. This important public inquiry should not be done by asking the failed protectors if they are doing a good job. The implications here for Canadians are enormous. Given the potential extent of continuing financial harm to Canadians, it is essential that our Government takes positive action without undue delay.

10. Proper training education and credentialing be made mandatory for all who provide financial advice to Canadians.

11. The criminal code of Canada must be recognized and must apply to the activities of financial crimes and organized financial criminals just as it does for others. Currently the industry ability to ‘self’ regulate is immunizing itself from accountability under the Criminal Code of Canada.

12. Special prosecutors should be trained and established to ensure that Canada does not let high status financial crime, and organized financial crime become the largest drain on the Canadian economy. It is now believed to be the largest criminal drain in Canada.

Larry Elford(As an individual)

Dear Mr. Elford,

The House of Commons Standing Committee on Finance would like to invite you to appear before the Committee in Ottawa this Wednesday, June 7, 2017, from 3:30 p.m. to 5:00 p.m. in view of its study of Consumer Protection and Oversight in Relation to Schedule I Banks.

On Wednesday, May 3, 2017, the Standing Committee on Finance adopted the following motion:

That, pursuant to Standing Order 108, the Committee undertake a study of no more than three meetings to understand the practices of Schedule I banks on the sale of financial products and services to clients with special regard to:

i. sales practices and incentives for employees;ii. opportunities for redress;iii. codes of conduct;iv. penalties for breaches of codes of conduct; and

that the Committee also call upon the Financial Consumer Agency of Canada and the Office of the Superintendent of Financial Institutions to discuss their overview of the financial services industry with regard to the study above.

Your participation, as part of a panel of representatives from up to three individuals, would consist of a five-minute opening statement, followed by rounds of questions from the members. Places on the panels are limited.

The document entitled Guidelines for Witnesses is attached for your review prior to your appearance before the Committee.

Please confirm your acceptance of this invitation within the next 24 hours by way of reply to this email. Further details regarding your appearance, including the Confirmation of Appearance form to be filled out and sent back to us, as well as information about the reimbursement of travel expenses, will be provided once your acceptance has been received.